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Sam. Saint Gonna change one of these days. Welcome, friends, to another edition of Economic Update, a weekly program devoted to the jobs, the incomes, the debts, the prospects for our kids, all those things that go under the heading Economic Dimensions of Our Lives. I'm your host, Richard Wolff. I've been a professor of economics all my adult life, and currently I teach at the New School University in New York City. Let's jump right in. This is the Thanksgiving weekend, and while we have much to give thanks for, not the least of those is the opportunity to talk with one another honestly about what's going on in our economic system. One of the hot issues for weeks now has been the economics of immigration. Well, to be more honest, it's about immigration in general. Immigration, particularly by refugees driven from their homelands by unbelievable economic distress, coupled with political and military interventions that are often beyond what we can imagine, if we've been so lucky as not to have these kinds of problems in our own lives. So I wanted to talk a little bit about the economics of immigration. The economics that make people leave their homes, the places where they were born, where they know family, friends, where they know the customs and the cultures, where they have a job, where they feel comfortable, speak the language, all of that. Leave all of that and go to another place where they don't know whether or what kind of job they will ever have, what kind of income they will have, whether it's even safe to be there, who will be there with them for people to make that kind of a move, you know that the conditions where they are must be unspeakably difficult in order to take the risks, suffer the costs that are involved in being a refugee or being an immigrant of any kind. And we've seen lots of immigration in the last 30 or 40 years, from the various parts of the world to another. It's a phenomena everywhere, and it reflects a global economic system that is making life unlivable for large numbers of people now here, now there. But it's a general problem and should not be confused with the specific conditions which in each case make it happen there as opposed to somewhere else. So what can we say in a more general way about the economics of immigration? I think one of the least understood aspects or causes of these issues is our capitalist system. And once again, I'm going to be able to show you, I think, how this system produces certain of the problems we face. And I don't do that because I enjoy finding fault with capitalism. That's not very difficult to do. What I'm doing it for Is if we recognize a problem and we understand what a contributing cause is, we'll be better able to solve the problem. We'll come up with a solution because we understand where it comes from and why it happens. And that's the point. Over the last 30 to 40 years, capitalist enterprises, particularly big ones, and particularly those in the dominant parts of the global economy, Western Europe, North America and Japan, have gotten into a competitive struggle with one another that has led them to look for ways to save themselves in that competitive struggle, to gain an advantage if they can, in that competitive struggle by finding ways to produce whatever they make at lower cost. And chief goal there is to find a way to pay workers less in wages and salaries and thereby make a better profit, thereby maybe lower your price so as to out compete the other producer who hasn't yet found cheaper workers, lower paid workers, etc. So what capitalists have done is basically offered the world, as a result of their competition, the following. We will compete with one another by leaving Western Europe, North America and Japan and moving to where the wages are much lowerchina, India, Brazil, Africa and so on. So that's what we're going to do. But say the capitalists to the world, we have an option of an alternative that would also allow us to pursue this competitive struggle. Instead of moving to where the workers are low paid, we can bring the low paid workers to where we already are. And that's called immigration. If you don't go to Asia, you bring Asians to North America, Western Europe and Japan, and ditto all the other parts of the world. Basically, we're being told by capitalism and its competitive big businesses, you have a choice. For the last 30 years, until recently, the basic movement was from North America, Western Europe and Japan to areas of the world where wages were cheap, particularly Asia, but other parts as well. But then the mass of people began to protest. Their jobs were disappearing, their incomes were disappearing. Countries began noticing that there were Detroits and Clevelands and Camden's and cities completely wrecked by the departure of businesses to capture lower wages someplace else. And a criticism of globalization developed because globalization was the fancy term to cover the export of jobs to where wages were low. Okay, said the capitalists, if you're going to make it hard for us to leave, we'll bring the poor people here so we can pay lower wages that way. Fundamentally, then the issue is capitalism. If we don't want either to to suffer the loss of jobs as industry moves to where the wages are cheap, or the social problems that go with massive immigration of poor people into a society that hasn't the infrastructure or the commitment to be a decent host. If we don't want to be in either of those positions, we have to confront the problem where it originates, in the profit driven competition among big businesses. Because they're the ones that are confronting the rest of us with this choice. If they didn't have to do that, if we didn't have businesses driven by profit and competition, we wouldn't face this absurd choice and be trapped within it. Second update I want to spend a few minutes on with you has to do with a strange debate. It arrives periodically, flares, then kind of dribbles away, and then a few years later returns. Let me describe it to you this. On the one hand, there are alarmists, people who look at the economy and begin to shout an alarm. Capitalism, they say, is collapsing. The world economy is disintegrating, our jobs are disappearing, our incomes crashing. You get the picture. Are there people who overstate all of that? Yes. Are there the alarmists for whom the sky is falling? The sky is falling is a kind of mantra that they repeat. Yes, there are such folks, but they have their equivalent on the other side. And the other side is the more dominant one in our culture. And here's what the other side don't pay attention to the alarmists. There's always a few people who see the the blight side of things. We're here to tell you that our capitalist system is fundamentally healthy, fundamentally in good shape, fundamentally on a growth path. We don't have to worry. Don't listen to these crazy alarmists. Dismiss them out of hand. What I want to tell you is it's just as irrational to dismiss the alarmist. It is to be an alarmist that these are not the either ors that any of us have to choose between, because they both make a fundamental mistake. First, capitalism is in fact a highly unstable economic system. You don't need to be an alarmist to say that. You just need to pay attention to history. Capitalism as a system is 2 to 300 years old, begins in England back in the 18th century, more or less, and then spreads to the rest of the world over the last 250 years, more or less. The dates are not crucial. Wherever capitalism has become the dominant system, starting in England and then everywhere else, it has been unstable. It has had an economic downturn every three to seven years. Some of them are short and shallow, others of them are long and deep. The biggest two so far were the great crash of 1929 that lasted throughout the 1930s, the so called great Depression. And the second worst is the one we're in now, the one that crashed in 2008 and is very much still with us. But there have been many, many other economic downturns, 11 for example, between the end of the Great Depression and, and the one that hit in 2008. So it's a highly unstable system. For anyone seriously to say that we don't have to worry that the capitalism we lived in is going to crash simply flies in the face of our history. Everything has been done in the history of capitalism to try to solve this problem, to prevent the system from crashing, to prevent these regular downturns that throw millions of people out of work, that drive thousands of enterprises into bankruptcy, and so on. The greatest economist of the 20th century, John Maynard Keynes, a British trained economist teaching at Cambridge University in England, came up with a very brilliant analysis and a whole host of policies, monetary policies and fiscal policies designed to manage a capitalist economy so that we wouldn't have these downturns. It failed. We're in one now. That's the proof. The rest is detail. We have every kind of reform that's been passed, every kind of regulation, before the New Deal, during the New Deal, in the years of the last 20 to 30 years. They don't work. The best you can say for them is they might have made these downturns less frequent, maybe less horrible, maybe, but fundamentally, stop it. Fundamentally prevent us from being in a crazy economic system that periodically produces what, let's be real clear, friends, it produces the situation we have now. Millions of people who want a job, nothing more, nothing less, a job. Huge part of our tools, equipment and raw materials sitting idle. Currently, according to the Federal Reserve in The United States, 20% of our tools, equipment, raw materials, factory space, office space, and all the rest are sitting useless, doing nothing, wasting away. And could we use the output that those millions of people who want a job and those tools and equipment that are available could make possible? Of course we do. To rebuild our cities, to take care of our children, to do something for our aging population. We can all make the list. A system that periodically produces this irrational juxtaposition of unemployed people, unused resources and unmet social needs is something about which you ought to be critical. It's not about being an alarmist, knowing that the world is going to end next week or next month, but to dismiss the alarmists as if we've got a fundamentally healthy system we don't have to worry about. That's just silly. Okay, in the time that we have left. Let me quickly go through a couple more economic updates and then respond to your questions. I wanted to bring you all to an awareness that the European countries are really ganging up these days on Ireland. And I wanted to tell you why the Irish have taken the lead. They're not the only place to do this, but they're a major player in this game of dropping down their tax rates. Now, that's very dangerous for a country to do for two reasons. One, it bankrupts the government. It means that the government is not raising money from corporations because it drops the tax on them. And that tends to do one of two things or both of them. One, it means that the government hasn't got the money to provide social services to the mass of people, or it has to tax the average person more to make up for what it is, not taxing the big corporations. Well, then why did Ireland do that? The answer is simple. It wants those corporations to bring business to Ireland to locate their offices, their storehouses, their factories, if they can in Ireland because that will produce more jobs for the Irish, even at the expense of the French or the Germans or the Americans who are being left behind. In the end, this game is horrible for the average person. Why? Because it makes every government compete with Ireland. How do you keep your industries in Belgium or France or Germany or Italy or United States or Canada? How do you keep them from going to Ireland and paying to the Irish government the taxes there rather than in your country? Well, you're tempted to compete with Ireland, drop your tax rates so that your company has no incentive to go to Ireland where the tax rates are cheaper. This is called a race to the bottom. Every country, in order to hold on to the jobs it has, lowers its taxes. The end result is everywhere. Taxes on business are low and we don't get the services from the government, which isn't raising that money, or. Or we have to pay the taxes that the corporations have gotten out of. This is a great system, this competition of countries over tax rates. It's a great system for capitalists. It's a very bad system for the rest of us. And the rest of Europe is trying to tell the Irish can't play this anymore. We'll see how this plays out. Okay, I want to turn now to a question that again is coming from many of you. And before I do, let me remind you how to get questions to us here at Economic Update. Make use of our rdwolff with two f's.com and democracyatwork.info that's all one word. Democracyatwork.info both of those websites are not only interesting with the materials we upload onto them all the time. The courses, the interviews, the lectures, audio files, video files, written material. There's really a wealth of information there available to you without any charge. 24,7 make use of it. It's also a place where you can send us your comments, your criticisms, your questions so that we can respond on the air or via email, or shape the programs to deal with the issues you let us know are important to you. Also, our websites contain materials that help you be a partner for us. We want to ask you to share what we do on this program and what we put on our websites with other people who might be interested. The program as a whole, a part of it, teach people that there is this kind of service being provided. If they're interested, help them to access it. That's doing what we try to do and, and you can be a partner in that other ways that the websites can help you. Let us know if there's a radio station in your area that might be interested in carrying this program. We will follow up, talk to the folks there and move from the 50 stations that carry this program now to the hundred we hope to be carrying them soon. It's also a way, if you are interested in converting an existing business into a workers co op, into a. Which we talk about a great deal and which I'm about to in a moment. We now have a partner, a firm of accountants and lawyers and credit specialists who can make that happen, who can work with an employer or employees or both to convert a business and to do it in financially advantageous ways. Use our websites if you can. Let us know if there is such a business, what some of the contact information is and we will connect such a business workers employer both to this firm so that they can have a conversation and pursue this with the real technical specialists who know how to help you and who will do it in an honorable, committed way. Otherwise we would not have partnered with them. Okay, here's the question that many of you have sent me. If there were an economy that had been converted in general so that most enterprises were worker self directed enterprises, a co op based economy rather than a hierarchical, top down, capitalist based economy, would there be a place for small businesses? And if so, what would that place be? And many of you have asked it in different ways, but that's the basic question, so I wanted to answer as best I can to this very important question. So first of all let me assure you that the whole idea of building a cooperative economic system involves a transition from what we have now to that. And that's going to take time and that's going to go at different rates in different industries in different countries. And of course there will be during that transition all kinds of other enterprises. But there's a special position for small enterprises, and here's what it is. Whenever you organize an economy in a collective way, so that, for example, 200 workers in some enterprise will now become their own board of directors, they will convert it to a co op. They'll make the decisions together in a democratic way what to produce, how and where, and what to do with the profits. That kind of enterprise, which is democracy in the economy and is something that I support with great enthusiasm, can sometimes be slow to make changes, improve technology, new products, things like that. Many of you have written to me worried about that, because you kind of understand that whatever the benefits are of a democratic arrangement, you kind of have to talk your questions through and you have to talk your processes through. And it may be harder or slower to make changes, particularly big ones. Fine. Let's say that a society of co ops should create, would create the resources, the credits, the opportunities for inventive people to try new things, to set up new enterprises that explore a new technology or explore a new product, one that can do something better for people than what exists. Innovation, entrepreneurship. Will that exist in a co op economy? Absolutely. And the incentive will be there too. It'll work something like this. If you take a chance, work with a new technology, develop a new product, and you succeed in the sense that people want it and turn to you and buy what you produce, or it's distributed in some way that people approve, then you will make extra money. You will be the proprietor of this business, it'll be a small business and you can work it. And perhaps we'll let you work it any way you want. So there's a place for entrepreneurship, for innovation, and for small businesses, even small businesses, in which there's a leader and people that he or she hire. Yes, a small capitalist business. But here's where the democracy comes in. When the people who make that change retire reach that part of life when they don't want to do this anymore. If they do, or if they die at work because they love their job, fine. But when that generation that made the breakthrough is done, then the democracy kicks in. At that point it becomes a worker co op. Because the principle of democracy, the principle that all the people who work In a place who depend on what goes on in that place have a right as human beings to participate in deciding what goes on there. That kicks in after the first generation, let's call it that, started the business, that made the innovation. The children of an innovator are not the ones who should be in a position to control in an undemocratic way what happened. We can give that space to the first generation. The ones who make the breakthrough, the ones who make the innovation, they get the reward. They get that extra incentive. The society as a whole benefits, okay? But our commitment to democracy kicks in at the end of that generation, leaving the space in the next generation for the children of that entrepreneur or anybody else to again make that kind of breakthrough. So there would be a place for small businesses to get the benefit to all of society of allowing people who want to break the mold, who want to be unique, who have a brilliant new idea or who come up with something innovative to have their way to realize that project, to explore it, to see whether it works in the society, and to get the benefits when it does. And the society gets the benefits of their innovativeness and the democracy that is reaffirmed at the end of that innovator's productive life. I think that would be a way to accommodate what many of you are concerned about, the power of individual innovation within a commitment to democracy. And that's the kind of way of working these problems out that I suggest a cooperative economy of the future will find its way to achieve the and to institutionalize in its society. Okay, we've come to the end of the first half of this program, but before we leave for today, I wanted to mention a struggle that is going on that's going to become bigger, I suspect, in the years ahead. And so I'm not going to say much about it other than to alert you to it. The United States Chamber of Commerce, a professional lobbying institution of arguably the most important among all of the pro business lobbyists in the United States, has undertaken what is virtually a political war against something called the Consumer Financial Protection Bureau. That is a new institution that came out of the Dodd Frank upset of our country, watching the illegal, unethical and so on behavior of our biggest banks in the collapse and meltdown of 2008 and 2009. It has been particularly championed by Massachusetts Senator Elizabeth Warren, and she indeed, and the Consumer Financial Protection Bureau are the targets of pretty intense public ads and campaigns funded and pushed by the Chamber of Commerce to get rid of that agency or to hamper it with rules and regulations that will make it impossible for it to protect the consumer, which it was established to do. The Chamber of Commerce is going to be appealing in ads of all kinds that many of you will see. They have the money. The government does not engage in return advertising. All that can happen is that those politicians who willing to buck the Chamber of Commerce, and those are few, will have whatever chance they have to use their positions as congressmen and women as senators. But that's an unfair fight, or at least it's a fight between those with very limited resources against the Chamber of Commerce that can draw on the bulk of American business for literally endless amounts of money if they can show that they're preventing the government from protecting the consumer against business. I'm putting aside what it means to have an economy where we have to protect the consumer, the majority against business, the minority, from exploitation and being ripped off and abused. I started many of my programs, as you know, telling you one or another story, whether it's about VW polluting the air or Toyota not giving us safe seat belts, whether Whole Foods is overcharging us for the packaged food and so on. I won't talk about that this time. But I will tell you that there is an important struggle between business and consumer protection that affects you, your children and your future. And it's one that's worth paying attention to. Please stay with me. We will have a very important and I think very interesting interview with when we return in a very short time. Welcome back to the second half of Economic Update for this Thanksgiving Day weekend, 2015. I am very proud to have with me again, and partly, by the way, because so many of you have written in asking me to bring back Dr. Harriet Fraad, who is a mental health counselor and a hypnotherapist with a private practice in New York City. And she also writes prolifically in a variety of places on politics, economics and how they intersect and interact with personal life. And that's indeed why I wanted to join with us today because as she will explain, there's been some recent research that has really touched precisely on the interaction between economics and personal life. And so this is a perfect opportunity to explore that. So thank you very much, Dr. Frad, for joining us.